DAILY MORNING NOTE | 3 January 2024

Singapore stocks started 2024 weaker amid mixed trading across the region, falling 0.3 per cent or 10.32 points to close at 3,229.95 on Tuesday (Jan 2). Shares of DFI Retail Group led the decliners, falling 2.5 per cent to close at US$2.34. Real estate investment trusts (Reits) were also among the losers, with counters such as Mapletree PanAsia Commercial Trust, CapitaLand Ascendas Reit, and Mapletree Logistic Trust, slipping between 1.7 and 1.9 per cent. The three local banks turned in a mixed performance. DBS and OCBC ended in the red, slipping 0.4 and 0.6 per cent respectively. Meanwhile, UOB shares closed higher, rising 0.2 per cent. Yangzijiang Shipbuilding was the top STI gainer on Tuesday, gaining 3.4 per cent to close at S$1.54.

US stocks fell at the open on Tuesday (Jan 2), kicking off 2024 on a dull note, as Apple shares dipped following a broker downgrade and Treasury yields climbed as investors tempered their expectations around interest rate cuts this year. The Dow Jones Industrial Average fell 123.32 points, or 0.33 per cent, at the open to 37,566.22. The S&P 500 opened lower by 24.63 points, or 0.52 per cent, at 4,745.20, while the Nasdaq Composite dropped 137.65 points, or 0.92 per cent, to 14,873.70 at the opening bell.

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SG

Alpina Holdings secured new contracts worth a total of $34.2 million in the second half of its FY2023 ended Dec 31. On Jan 2, the engineering firm announced an update on its new contracts from the last six months, with a majority coming from the public sector. The largest of these came from a one term contract for the provision of building services maintenance for a Singapore university with a provisional contract sum of approximately $20 million. Other significant contracts came from various government statutory boards, with a one term contract for the provision of maintenance and upgrading works of park facilities worth some $3.4 million, two contracts for the provision of mechanical and electrical cyclical improvement works for a multi-storey carpark estimated at $7.7 million and one contract for the replacement of mechanical and electrical system, street and flood lights valued at approximately $1.9 million. The eight contracts have varying completion dates ranging from Feb 2025 to March 2029.

DBS Group Holdings, through its wholly-owned subsidiary, DBS Bank Ltd, has obtained the requisite regulatory approvals to increase its existing stake in Shenzhen Rural Commercial Bank Corporation Limited. Following the approval, DBS’s stake is now at 16.69%, up from the 13% it first acquired in October 2021. Under the transaction, DBS will acquire 383.6 million shares in Shenzhen Rural Commercial Bank from Shenzhen Huaqiang for a total of RMB2.01 billion ($376 million) or RMB5.25 per share. The transaction does not require the bank to commit any technology resources. DBS has been banned by the Monetary Authority of Singapore (MAS) for six months from Nov 1 from making non-essential IT changes to ensure that keeps a “sharp focus” on restoring the resilience of its digital banking services. The transaction is expected to be immediately accretive to DBS’s earnings and return on equity (ROE).

Keppel REIT’s freehold boutique office building in Tokyo, KR Ginza II, has achieved full occupancy with the introduction of two new tenants at the start of 2024. On Jan 2, the manager of the REIT announced the new tenants from the technology, media and telecommunications sector at KR Ginza II, bringing the asset to 100% occupancy from 36.3% occupancy at acquisition. The acquisition of KR Ginza II in Nov 2022 marked Keppel REIT’s strategic entry into Japan. KR Ginza II is managed by Keppel’s Fund Management and Investment team in Japan, which has 19 years of track record in investing and managing various assets worth more than JPY250 billion ($2.34 billion)

Keppel Infrastructure Trust has announced that the trust has received a $50 million loan facility on Jan 2. The facility agreement includes the caveat that should KIT’s manager cease to be an entity wholly-owned by Keppel Capital Holdings or Keppel Corporation BN4 -0.28% , KIT will be required to pay all outstanding loans. Units in KIT closed 0.5 cents higher or 1% up at 50.5 cents on Jan 2.


US

Apple fell 3 per cent on Tuesday (Jan 2) after Barclays downgraded the shares of the world’s most valuable firm on concerns that demand for its devices from the iPhone to Mac will remain weak in 2024. Apple has been grappling with a demand slowdown since early last year and has forecast holiday-quarter sales below Wall Street estimates. Its performance in China has also been a worry after the revival of local rival Huawei. Risks were also mounting for Apple’s services business, which has come under the scanner in countries including the United States over app store practices. The business has often outpaced growth in Apple’s hardware segment in recent years and now accounts for nearly a quarter of the company’s total revenue.

Chevron said on Tuesday (Jan 2) it would record an impairment to a portion of its US upstream assets, primarily in California, and take losses related to oil and gas production assets sold in the US Gulf of Mexico (GoM). The oil major, in a filing, said it expects to take non-cash, after-tax charges of US$3.5 billion to US$4 billion in the results of the fourth quarter of 2023. It said the impairment of California assets was due to continuing regulatory challenges in the state, which has resulted in lower anticipated future investment levels in its business plans. The company, however, expects to continue operating the impacted assets for many years to come. Chevron added the loss recognised against the sold GoM assets were related to abandonment and decommissioning obligations, as companies that purchased those assets had filed for protection under Chapter 11 of the US Bankruptcy Code.

Tesla beat estimates for fourth-quarter deliveries on Tuesday (Jan 2) after a push to hand over more Model 3 electric cars before some variants of the compact sedan lose federal tax credits in the New Year under the Inflation Reduction Act (IRA). The world’s most valuable automaker delivered a record number of vehicles in the fourth quarter and hit its 2023 target of 1.8 million, helped by increasing discounts on key models. The end of the tax incentives on some models was expected to bring sales forward into the fourth quarter, weighing on deliveries this year.

China’s Alibaba Group said on Tuesday (Jan 2) it had repurchased a total of 897.9 million of its shares for US$9.5 billion during 2023. The shares were bought in both the US and Hong Kong stock markets, the company said in a filing. The e-commerce giant said the remaining amount the company’s Board had authorised for its share repurchase programme, which is effective through March 2025, was US$11.7 billion. This share repurchase programme resulted in a net reduction of 3.3 per cent in outstanding shares in the last 12 months after accounting for shares issued under ESOP (employee stock ownership plan). Alibaba had 20 billon outstanding shares as of Dec 31, compared with 29.7 billion at the end of 2022.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR


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